                1. Reservation of Copyright.        
The disclosure of this patent document contains material which is subject to copyright protection. The copyright owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the U.S. Patent and Trademark Office patent files or records, but otherwise reserves all copyright rights whatsoever.
2. Field of the Invention.
The present invention relates to certain types of online auction systems and methods for providing sellers and buyers a mechanism for selling and buying, respectively, products (goods or services) in unit quantities.
3. Description of Background Information.
Auctions are used to sell many types of products (goods and services), including land, commodities, art, food, money, work contracts, computers and automobile parts, to name just a small number. The goal of the seller using an auction process is to obtain the highest value possible in exchange for the good or service. Thus, goods and services are frequently given to the highest bidders so as to provide the seller with the most profit.
Auctions provide sellers access to large quantities of buyers, without the seller having to set a fixed (sometimes arbitrary) price for its goods or services. The auction process can also save sellers time by avoiding negotiating prices individually with buyers.
There are many different types of auction formats. Open auctions give buyers open access to the current bid price, and allow the buyers to proffer a counter-bid when they learn about the most recent highest bid. There are also silent and sealed-bid auctions. Auctions may also be categorized in terms of whether they conform to an ascending price scheme, or whether the price slowly drops until a buyer will come forward and purchase the good or service.
Offline auctions may require buyers and sellers to meet at one or more regionalized or fragmented auction sites. This limits the ease with which buyers and sellers will be able to meet.
Some offline auctions are not so region-limited and allow buyers access to participate in a bidding process through various communication channels. For example, a publication may be widely distributed in the form of electronic or printed media, and bidders may be able to send their bids to a central location, for example, by facsimile mail, e-mail or telephone. Such systems, while centralized, still present certain inefficiencies in making information available to buyers, and in allowing buyers to send in their bids to the central auction facility.
These and other limitations associated with offline auctions can limit the selection of products auctioned, discourage participation, and drive transaction costs up.
In many cases, multiple layers of intermediaries exist between the original seller and the end-buyer.
Online auctions address many of these problems associated with offline auctions. One type of online auction of increasing popularity is the Internet web-based e-auction. Many types of e-auction sites exist, such eBay, Amazon and OnSale. Sites such as these provide centralized trading communities for bringing together buyers and sellers. These systems allow real-time listing, browsing, and bidding through one commonly-accessed system. Such activities may take place from any personal computer having Internet access anywhere throughout the world. Many sites specialize in particular types of seller-buyer trading, e.g., person-to-person (eBay), business-to-consumer (OnSale), or business-to-business (VerticalNet).
Existing e-auction systems have databases which provide both buyers and sellers access to important information needed to analyze trading data and set prices. Access to these databases decreases inefficiencies associated with distributing and obtaining information and thus encourages trading activity.
Online auctions employ many well-known auction methods, including such commonly used business-to-consumer or business-to-business auction formats as the multi-unit ascending auction described by Vickrey (1962) and Ortega-Reichert (1968). The YankeeAuction™ of OnSale.com uses a variation on the format disclosed by these Vickrey and Ortega-Reichert references. The YankeeAuction model involves a seller auctioning a quantity of identical units. Bidders select the number of units they need and the unit price they are willing to pay. Progressive bidding occurs for a specified period. At the close of the auction, the highest bid prices win at the respective bid quantities. Bids are ranked by unit price, then quantity, and then bid date. Accordingly, with the Yankee Auction, the highest bid wins. In case of ties, larger quantities win. For when the quantity is identical, earlier bids will take precedence.
There are many types of products that sellers would prefer to sell in larger quantities. Thus, the sellers may give a substantial discount to the buyer purchasing a larger volume. This is particularly the case with the used computer market. Every year, global computer dealers sell billions of dollars worth of used computer systems and hardware. FIG. 1 shows a typical supply chain for used computers. The majority of this equipment originates with computer manufacturers 32 (e.g., IBM, Dell, Compaq, Apple, Sun, and Cisco). These computer manufacturers 32 obtain the used computers from their previous owners 30 as lease returns and as trade-ins for upgrades. The computer manufacturers 32 are faced with the logistical challenge and associated cost of warehousing this saleable stock. Accordingly, the manufacturers 32 auction the stock to resellers, comprising wholesalers 34 and dealers 36. Dealers 36 then market the computers to end-users 38.
Manufacturers typically sell their used PCs in enormous fixed-size lots of 1,000-10,000 units, that only a handful of resellers can afford to purchase. The resellers then resell the items in smaller quantities, charging higher prices per unit.
There is a need for a centralized auction system or method which will minimize the transaction costs incurred by the seller and the buyer. The seller will preferably be able to quickly sell large quantities of products directly to buyers of all types while maximizing the total revenues generated from the sales.
4. Definition of Terms.
The following term definitions are provided to help the reader in understanding the terms used herein.
Bid Increment: the incremental amount of money by which a buyer must increase a bid over a competing bid in order to win the bid.
Maximum Parity Unit Price: This is a parity unit price which corresponds to the smallest allowable sublot quantity set by the seller.
Minimum Sublot Quantity: this is the smallest sublot size which a buyer can purchase.
Parity Unit Price: a price falling on the parity unity price curve, which represents the unit price needed to win a given bid as a function of quantity in accordance with a pricing model set by the seller.
Reserve Unit Price (Current Reserve Price): unit price if a buyer purchases the total lot quantity.
Sublot: a portion of a lot.
Total Lot Quantity: the total quantity of units comprising a given lot to be auctioned off by a seller.
Unit: a measure of goods or services being sold through the online auction. An example of a unit is one computer, an hour of professional services, or a dozen golf balls.
Unit Bid Price: the amount of money a buyer bids per unit.